Correlation Between Fair Isaac and Oracle

Can any of the company-specific risk be diversified away by investing in both Fair Isaac and Oracle at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fair Isaac and Oracle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fair Isaac and Oracle, you can compare the effects of market volatilities on Fair Isaac and Oracle and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fair Isaac with a short position of Oracle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Isaac and Oracle.

Diversification Opportunities for Fair Isaac and Oracle

0.94

Correlation Coefficient

Fair Isaac  Oracle

Almost no diversification

The 3 months correlation between Fair and Oracle is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac and Oracle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oracle and Fair Isaac is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fair Isaac are associated (or correlated) with Oracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oracle has no effect on the direction of Fair Isaac i.e., Fair Isaac and Oracle go up and down completely randomly.

Pair Corralation between Fair Isaac and Oracle

Assuming the 90 days horizon Fair Isaac is expected to generate 0.86 times more return on investment than Oracle. However, Fair Isaac is 1.16 times less risky than Oracle. It trades about -0.22 of its potential returns per unit of risk. Oracle is currently generating about -0.22 per unit of risk. If you would invest  224,000  in Fair Isaac on September 27, 2024 and sell it today you would lose (21,800) from holding Fair Isaac or give up 9.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Fair Isaac  vs.  Oracle

Fair Isaac

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Isaac are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fair Isaac reported solid returns over the last few months and may actually be approaching a breakup point.

Oracle

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Oracle may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fair Isaac and Oracle

The main advantage of trading using opposite Fair Isaac and Oracle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Isaac position performs unexpectedly, Oracle can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Oracle will offset losses from the drop in Oracle's long position.

The idea behind Fair Isaac and Oracle pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.